As China’s bike-sharing economy booms, its manufacturers suffer

At 2pm on a Tuesday, Baochi Bike sales manager Xiao Xizheng was having a nap in her dimly lit shop. Dozens of bikes from the company’s extensive range were lined up in the showroom along the main street in Wangqingtuo, in Tianjin’s western suburbs.

The area used to be the hub of bicycle manufacturing for northern China and even up until a couple of years ago, the streets were crammed with buyers who could not load the stock onto trucks quickly enough for sale around the nation.

But Xiao doesn’t bother turning on the showroom lights these days – hardly anybody comes through the door.

The bike-sharing boom has changed everything. While sharing firms have placed big orders with some manufacturers, others like Baochi have been left out of the race, their prospects punctured by a sharp change in the market.

China has embraced the sharing economy like few other countries, with flourishing platforms offering everything from peer-to-peer lending to rental umbrellas. Chinese consumers lead the world in their in preference for shared products or services, according to a 2014 Nielsen survey. And support for the sector has been written into the country’s 2016-2020 economic blueprint in the hope that the growth will help counter slowing expansion elsewhere.

Bike-sharing firms began taking off around the country early last year, offering internet-connected users a convenient and cheap form of transport around China’s clogged cities with just the swipe of a phone. Backed by more than US$1 billion in combined financing, 70-plus bike-sharing companies entered the rapidly expanding market.